Source: National Instruments.

Hundreds of companies largely fly under the radar of most investors despite having promising long-term prospects. National Instruments (NASDAQ:NATI) is far from a household name, but the Austin-based maker of software and equipment has had great success in serving the scientific and engineering communities with the tools and technological solutions that help its customers do their jobs better.

On Thursday afternoon, National Instruments reported its fourth-quarter financial results, and the company boasted strong growth that surpassed most of its shareholders' expectations. Let's take a closer look at National Instruments to discover more about this company and its future growth potential. 

Record results for National Instruments
From looking at its headline numbers, National Instruments had a blowout quarter. Revenue soared 11%, to $333 million, overcoming currency headwinds to surpass consensus sales figures among analysts. Net income climbed at an even more impressive pace, with 37% gains working out to $0.34 per share, or $0.04 above investors' expectations.

National Instruments has two major segments, and both produced significant growth for the company during the quarter. The bulk of the company's revenue comes from product sales, which climbed almost 9% from the year-ago quarter. Software maintenance revenue makes up less than a tenth of National Instruments' overall sales, but it grew at a much faster clip, picking up 36% during the past year.

In addition, the company has used international expansion efforts quite well. Growth in its Americas geographical division came in at 5%, but European sales rose 8%, and East Asia revenue soared 24%. Despite huge currency headwinds, the Emerging Markets segment saw dollar-revenue climb 11%, and National Instruments posted even stronger results on a currency-neutral basis.

Testing of wind-energy equipment. Source: National Instruments.

For the full year, National Instruments also had solid growth. Sales of $1.24 billion were 6% higher than 2013, with new-product revenue also hitting record levels. Net income of $126 million was more than half-again what the company made the previous year, further showing the progress that National Instruments has made.

National Instruments' executives touted its results. "We have built and continue to run our company for long-term, sustainable growth," said CEO James Truchard. "Our differentiated platform continues to deliver on our strategy of reducing the costs of our customers' systems, while growing our business in the markets we serve."

What's next for National Instruments?
Unfortunately, National Instruments will continue to have trouble handling the strong dollar. As CFO Alex Davern pointed out, "we are cautious given the macroeconomic environment," and the company expects that revenue growth will suffer from dollar strength into 2015.

With revenue guidance of $280 million to $310 million coming in below what investors had expected, some shareholders will be disappointed with National Instruments' future prospects. Yet on an adjusted basis, earnings guidance was roughly where those following the stock had expected, and the company hopes that foreign exchange markets will stabilize so that further reductions in guidance won't be necessary.

LabVIEW product. Source: National Instruments.

The good news for National Instruments, though, is that, in general, the company has a customer base that lends itself to recurring revenue. In particular, sales gains for its LabView visual programming language, PXI testing and measurement platform, RF modules, and CompactRIO programmable controllers all point to an ongoing need for National Instruments' products.

Perhaps because of that greater certainty, National Instruments announced that it would increase its quarterly dividend to $0.19 per share, up 27% from its previous payout. With its yield now rising above 2.5%, National Instruments pays an above-average dividend, and clearly hopes that future earnings growth will be sufficient to sustain that higher payout in the years to come.

National Instruments' results were encouraging for long-term investors in the stock. Still, the company will have to sustain and build on its past success in order to justify the stock's current valuations. Although deteriorating conditions in its home Texas economy could put some pressure on National Instruments, it nevertheless has the potential to keep growing into a worldwide niche powerhouse, and lend its expertise to promote important projects across the globe.